FTC looking at Google phones

THE NEW YORK TIMES

Published Sunday October 14, 2012 at 6:00 am

For more than a year, the Federal Trade Commission has been conducting a broad antitrust investigation into the way Google runs its Internet search and search advertising businesses. But in recent months it has added another investigation into Google’s competitive behavior.

This time, the focus is on phones — specifically, on patents that apply to lucrative smartphone technology and the conduct of Google’s Motorola Mobility subsidiary.

The FTC issued subpoenas in June seeking information from Google and smartphone rivals including Apple and Microsoft, and it questioned representatives of the companies as recently as a few weeks ago, said people briefed on the investigation.

Google owns patents covering communications and data-handling technologies that are crucial for the basic operation of smartphones and tablets — what are known as standard-essential patents. The investigators are scrutinizing the company’s policies around licensing these patents and suing other companies that it claims are infringing them, said these people, who spoke on the condition that they not be identified.

Google’s Motorola unit pledged to technology standards organizations that it would license the patents to others on “fair and reasonable” terms to stimulate the growth of the industry, benefiting all companies.

Bloomberg reported in June that the FTC had opened an investigation in this area. Since then, the agency inquiry has progressed, and the use of standard-essential patents has been an issue in several court cases and before Congress.

Google said in a statement on Tuesday: “We take our commitments to license on fair, reasonable and nondiscriminatory terms very seriously, and we are happy to answer any questions.”

Standard-essential patents, antitrust experts say, are the modern, high-tech equivalent of certain vital railway lines in the 19th century, like the Eads rail terminal and bridge across the Mississippi in St. Louis, the subject of a historic antitrust decision in 1912.

Essential patents, like rail bridges, can become anti-competitive bottlenecks if the corporate owner withholds access to the technology or demands unreasonably high payment.

The FTC investigation indicates that it is keeping an eye on the patent buildup by major high-tech companies.